Younger people to get less benefit than what they pay from gov't: data

Younger people to get less benefit than what they pay from gov't: data

on Dec 31, 1969 @ 7:33 PM

By Lee Minji

SEOUL, July 28 (Yonhap) -- South Korea's younger generation is likely to receive less than what they paid for public benefits, a report showed Monday, highlighting the government's demographic headache of balancing its fiscal policy as rapid aging stokes welfare spending.

People in their 20s and 30s during their lifetime will spend 100 million won (US$97,561) more than the value of government benefits they will actually receive, according to a working paper co-authored by Bank of Korea economists Kim Myoung-chul, Im Seongyong and Japan's Senshu Univ. economics professor Kim Younggak.

Compared with people aged over 55 as of 2011 who received more benefits for what they paid for, those in younger age groups are expected to pay a minimum of 36.2 million won (50-55 age group) to as much as 112.4 million won (30-35 age group), according to the report.

The paper, which compares South Korea with its more quickly aging neighbor Japan, comes as the underemployed but highly educated younger people face mounting costs in supporting their parent generation.

Data by Statistics Korea show the proportion of people aged 65 for every 100 people in the 15-64 age bracket hit 15.2 percent in 2010. The figure is expected to reach 57.2 percent in 2040 and 80.6 percent in 2060.

The authors stressed the need for the government to expand its tax revenue in order to cope with the impact the demographic change will have on its fiscal health.

"There are urgent needs to counteract pre-emptively to population aging, which is to be realized soon in the near future. Demographic structure changes slowly but steadily," the authors wrote.

"The past 20 years in Japan's experience give us a great example on our preparing for future policy operations ... This implies that policy for improving the tax revenue through economic growth is also very important for the sustainability of government finance."

As Asia's fourth-largest economy, South Korea is on its path to becoming an "aged society," which means more than 14 percent of the population is 65 or older.

As of 2013, those aged 65 or older accounted for 12.2 percent of the country's 50-million population, according to Statistics Korea. The state agency projected the figure to rise to 24.3 percent by 2030 and 32.3 percent by 2040.